I think that there is a misunderstanding of the OP's request. What is being proposed may make economic sense to the Bank. I.e. they are currently financiang a mortgage of 97K and receiveng a return of 1.35%. Bank's actual cost of funds would be well above this level. Assuming a marginal cost of funds of 3%, the difference in rates constitutes an annual loss to the bank. Taking the 24 year remaining term and a consistent differential rate of 1.65% the bank would lose a total of 19,200 over the period (assuming an average balance of 48,500 outstanding for the period. Even taking the time value of money into consideration, it would probably pay the bank to seriously consider an offer >70K for a full redemption of the mortgage now.Why should the banks do a deal in such situations? The OP has a debt of 97K and is well positioned to pay it in full.
However if you did pay off whole lot now , you will SAVE on interest paid over the lietime of the loan, although there is probably a case that you could earn as much interest in a decent savings a/c
There is no cost to the taxpayer if AIB gave a 10% discount for the repayment of a long-term mortgage at ECB + 0.5%.Ridiculous for anyone to think that someone in a position to comfortably pay their mortgage would or should get a reduction. The taxpayer in effect picks the cost up.
Now to the more serious issue of what I think you should or could do. I would lodge an amount equal to your mortgage with AIB as a deposit, probably a 3 to 5 year terms to get the best rate. That protects you if there was a serious problem with the banks or Govt backed savings, i.e. at least your mortgage would be paid with the deposits being offset.
Where to check? Would this be a general bank policy - or likely to be mentioned in the mortgage agreement?Do check that there is a right of set off of the deposit against the mortgage.
Is there aam consensus that this would be effective in the event of a bail-in?
Where to check? Would this be a general bank policy - or likely to be mentioned in the mortgage agreement?
The point is moot as banks appear not to be doing these deals but 30% discount with only 8 years left wouldnt sound like its in banks interest anyway. Your current difference to SVR is about 3.5% which multiplied by 8 years is just barely 30%. ECB is unusually low right now so your tracker will likely average more than 1.1% over the 8 years. Also as you are presumably paying off capital the difference between SVR and tracker would not be on 100% of your current balance over the remaining term as this reduces every month.I was interested in this thread. I am too in the very lucky position to be able to pay off my tracker. Recently I have been informed that it is reducing to 1.1%. As it is costing them money lending to me. I proposed that we come to a settlement. I have 8 years left and proposed paying 70% of remainder to them.
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